Arshad Mansoor, Sr. Vice President, Research & Development INNOVATION SCOUTS: EXPANDING EPRI S TECHNOLOGY INNOVATION NETWORK

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1 RAC Briefing TO: FROM: SUBJECT: Research Advisory Committee Arshad Mansoor, Sr. Vice President, Research & Development INNOVATION SCOUTS: EXPANDING EPRI S TECHNOLOGY INNOVATION NETWORK Research Advisory Committee (RAC) Briefing Paper , Technology Innovation Research Planning, Project Selection, and Advisory Process, describes EPRI s Technology Innovation (TI) Program and the prospects it yields for enhancing EPRI s value to its members. This briefing paper proposes an expansion of EPRI s role in exploring breakthrough technologies by increasing engagements with early-stage developers, innovators, and their allies through the use of innovation scouts. As illustrated below and elucidated in the previous RAC paper, the TI portfolio includes four complementary components that draw upon expertise across EPRI and its members throughout the electricity enterprise to transform new ideas and innovative concepts into advanced knowledge and technology. Successful strategic R&D leads to application-oriented work through membership programs and supplemental projects in EPRI s Generation, Nuclear Power, Power Delivery and Utilization, and Environment sectors. Figure 1 EPRI s Technology Innovation Program RAC Briefing (9385G) Page 1 of 10

2 While the TI Program continues to have success in accelerating technology development, strengthening of its innovation network could greatly expand its effectiveness. Discussion Understanding disruptive technologies and their potential impact will be essential to the continued provision of reliable, environmentally sound and affordable electricity. EPRI and its members can expand the value of the TI Program by strengthening the existing innovation network they support by enhancing the industry s understanding of disruptive technologies and their impacts, both good and bad. A useful mechanism to categorize EPRI s and its members existing and potentially expanding portfolios is to use the U.S. National Aeronautics and Space Administration s (NASA) Technology Readiness Levels or TRLs as illustrated in Figure 3. The TRLs are a convenient way to explain the potential role of the Innovation Network s TI efforts. EPRI s Technology Innovation Program typically engages with its members in developments in levels TRL 4 through TRL 7 while then facilitating commercialization in TRL levels 7 through 8 by others. The program has been focused on levels 3 through 5 with modest efforts in levels 1 through 3. Figure 2 Technology Readiness Levels (Source: NASA) Table 1 contains a more detailed description of TRLs as they apply to EPRI. RAC Briefing Paper (9385G) Page 2 of 10

3 Table 1 Technology Readiness Levels (refer to Appendix A) TRL 1 TRL 2 TRL 3 TRL 4 TRL 5 TRL 6 TRL 7 TRL 8 TRL 9 Exploratory Research Lab Test Sub- System Development Subsystem Validation Subsystem Feasibility Early Demonstration Early Commercial Deployment Prototyping Demonstration Commercialization EPRI and its members leverage EPRI s technical staff and interactions with the electricity sector to identify opportunities. This process continues to be effective in moving technology from early TRL stages to later ones. This engagement typically involves funding the developer or others to prove feasibility, refine the technology development, and demonstrate the technology in utility applications. Figure 2 illustrates this role. Figure 2 EPRI s Role as Collaborative Technology Developer EPRI and the electricity sector continue to enjoy success as collaborators by leveraging some of the basic research conducted by national laboratories, universities, and other institutions such as the Department of Defense. This engagement uses core competencies in collaborative technology development, integration, application, and the ability to create demonstrations. However, this engagement leaves significant development opportunities on the table. In particular, EPRI has extraordinary strength in what may be termed applied innovation. EPRI, in collaborating with its utility members, is uniquely capable of interpreting the possible attributes of an innovative technology and further developing them for successful application to the electricity enterprise. EPRI can help design and implement that path across the valley of death and bring developments in TRL1 through 4 to get to level 6 or 7. Utilities and EPRI (with few exceptions) have modest funds available for blue-sky (TRL 1 through 3) research, and for good reason. Using even all of EPRI s $26 million per year RAC Briefing Paper (9385G) Page 3 of 10

4 Technology Innovation budget would not make a material difference in the state of blue sky science in energy. Table 2 lists available budgets for TLR level 1-3 in energy R&D. Table Budgets ($ millions) Agency Budget USDOE Science Office 1 $5,121 National Science Foundation (NSF) 1 $7,424 Universities (U.S.) 2 $185 Research Technology Transfer Institutions 3 $500 Defense Advanced Research Projects Agency (DARPA) 4 $3,200 Research Councils 4 $4,000 Start Ups 5 $14,800 Total $40,630 1 Based on preliminary budget requests to the Office of Management & Budget (OMB) made in December Based on assumption that 37 key universities in the U.S. have substantial power system engineering research efforts at $5M/yr or $185M. Examples include such activities as the California Lighting Research Center, the U.S. Davis Research Center on Energy Efficiency, the Western Cooling Efficiency Center, and the U.C. Santa Barbara Institute for Energy Efficiency. 3 Estimate based on California: California PUC funds on Emerging Technologies Coordinating Council at $50M/yr. 4 Wikipedia Based on the United Kingdom s Research Council on Energy s budget assumes 10 countries have similar budgets 9 Based on assumes 10% of $148B/yr is for TRL: 1-3. These types of investments can, however, are effectively leveraged by EPRI by forming a more intimate engagement with precisely the entities now engaged in TLR levels 1 3 R&D. These are in two general areas: (1) the work sponsored by government institutions and universities world wide; and (2) the work funded by venture capitalists usually in small start-ups. Work Funded by Government Institutions and Universities These include a number of efforts sponsored by state and federal agencies and universities that typically fund TRL 1 to TRL 4, but stop short of the research needed to determine applicability in the electricity sector. RAC Briefing Paper (9385G) Page 4 of 10

5 Work Funded by Venture Capitalists This includes a variety of efforts and results in varying degrees of success. These efforts may be anything along the TRL2 through 5 levels. Often these developments fail because of the lack of technology guidance from the targeted users or because of a lack of understanding of many of the development pitfalls. Proposal EPRI proposes to strengthen its innovation network by assigning innovation scouts for strategic areas of technology. These scouts would be responsible for engaging in assessments of technology world-wide so as to expand the network and its collaborative community and to provide broader reach into cutting-edge technology. Figure 3 illustrates the range of possible participants in the innovation network. Start-Ups Manufacturers Entrepreneurs Venture Capitalists EPRI Member Innovation Staff EPRI Technology Scouts EPRI Program Staff State & Federal Governments DOE Office of Science Defense Department State National (ASERTTI) Labs NSF Research Councils Universities Foreign Entities Figure 3 Expanding EPRI s Innovation Network With the support of its members, EPRI proposes to expand the innovation network to be more involved in the TRL level 1 through 3 activities of others by leveraging one of the key assets EPRI and its members have phenomenal engagement with the world s electricity sector. These efforts are always focused ultimately on technology commercialization with a goal to maximize value to utilities and their customers. The innovation network will typically not fund developments, but will leverage its use of in-kind labor, travel, its technical competence and its access to the electricity sector to capture the innovations and effect greater collaboration with the developers. After an initial screening the network would conduct an independent assessment of the development. Those with the highest RAC Briefing Paper (9385G) Page 5 of 10

6 potential value would be pursued as possible projects where EPRI might conduct joint R&D or endeavor to aid in the development itself. Additional, longer term, goals could include formulating supplemental or base funded projects, sponsoring demonstrations and preparing the path for commercialization by others. The innovation network will formulate a stage-gate approach in order to track progress and gauge the level of activity warranted by the innovation scouts and others. As a result, EPRI and its members would add the projects in which it chooses to become involved to its product portfolio. This would greatly enhance the portfolio by adding more technology innovation activities. These activities could become a feeder pipe line to EPRI base and supplemental programs and form opportunities for members to engage in bilateral engagements with developers based on the knowledge gained from the innovation network. Value to Members EPRI members are increasingly interested in how breakthrough technologies can enable successful, reliable, economic and environmentally sustainable production, delivery and use of electricity. As illustrated in Figure 4, there are important opportunities both to collaborate (e.g., EPRI) and to either partner or to individually pursue high value technology developments. An expanded innovation network could facilitate an understanding of breakthrough technologies. And innovation scouts could engage with EPRI Programs and utility innovation staffs to provide and objective and unbiased view of technology opportunities. EPRI would provide strategic technical intelligence to its members. In so doing, EPRI would also be facilitating a utility member network with a focus on technology innovation. Figure 4 illustrates the dimensions of technology strategy available to utilities that have a good understanding of breakthrough technologies. RAC Briefing Paper (9385G) Page 6 of 10

7 Yields Individual Competitive Advantage Avoid Alone Pursue the Development Partner* Low/Medium Value Technology Opportunity High Value Pursue Selectively Collaborate Broadly Applicable *Bilateral agreements or other arrangements between utilities or between a utility and a university or manufacturer Figure 4 Utility Technology Strategy Alternatives Regarding Breakthrough Technology EPRI members would have access to the EPRI innovation scouts and EPRI could provide actionable intelligence to its members surrounding breakthrough technologies. The function would facilitate members ability to develop business strategies surrounding prospective threats and opportunities from new technology. While TI information is available to all EPRI members and to the public on a nondiscriminatory basis, those active with EPRI in the network would have first mover advantage. Through this expansion in its innovation network, EPRI proposes to make the Technology Innovation Program so valuable that utilities join EPRI just to gain access to TI. Implementation Implementation would be carried out at the Strategic Program level funded under EPRI s Technology Innovation Program. Strategic Programs bring together several projects under nine key science and technology areas. In this area, EPRI incubates innovations through the proof-ofconcept, feasibility testing, and pilot demonstration stages. For select strategic programs a technology innovation scout will be appointed. That person would coordinate closely with the relevant program managers who have interests which align with the Strategic Program and will actively scan the technology horizon searching for opportunities similar to those described above. The entire activity would be coordinated by the Technology Innovation Program within the current TI budget. RAC Briefing Paper (9385G) Page 7 of 10

8 Initially, the Technology Innovation Program will focus on the Strategic Programs currently embraced by RAC. Strategic programs represent the core of the TI R&D portfolio. The nine active programs were developed and implemented in 2008 to They were created in order to better focus resources and to apply those funds to expedite development of advanced knowledge and technology, addressing a limited set of strategic issues and opportunities facing the industry. The nine active programs listed below involve interdisciplinary research to address strategic issues facing multiple segments of the industry. Table 3 Strategic Programs Sectors Program ENV GEN NUC PDU Biotechnology X X CO 2 Capture X X Emissions, Health & Environment X X Materials for Fossil & Nuclear Generation X X Materials for Power Delivery X X X Near-Zero Emissions X X Nondestructive Evaluation X X X Renewables X X X Sensors & Operations X X X As part of RAC s interaction, these programs will be reviewed and additional areas will be added where there is interest for innovation scouts. Why Would Innovation Developers Work with the Network? Innovation developers such as scientists, inventors, entrepreneurs, and others engaged in developing electric innovations at Technology Readiness Level (TRL) 1 to 4 would view the network of EPRI and its partners as a resource to cross the chasm of TRL 4 to 7. The network offers the following: A cadre of utility and EPRI technical experts who collectively have unrivaled expertise in understanding electric energy applications of technologies. An extensive network of utility executives and managers engaged in and interested in innovation. An extended network consisting of national laboratories, universities, government agencies and consultants as well as its growing engagement with venture capitalists and start-ups. RAC Briefing Paper (9385G) Page 8 of 10

9 A means to enhance the value of electricity to society and consumers by assuring that as many new high-value electric innovations reach the market as practical. A means to expand the portfolio of technology development considered to be part of EPRI members overall efforts by adding new innovation partners and their prospective technologies. This also bolsters EPRI s mission and vision. Access to EPRI s technical expertise, staff time and travel, access to some laboratory facilities, and engagement with the ultimate users of the technology. EPRI will typically not provide funding directly to innovation developers under this program. Qualified Innovations The Innovation Network is interested in selectively pursuing innovations with the following characteristics: Innovations of potentially high value to society, utilities, and their customers. Innovations whose development path contains a fair degree of technical and/or market risk therefore challenged in the ability to easily cross the chasm. Innovations for which the innovation developer is willing to share a sufficient degree of information for the network to conduct an assessment of potential value and to agree to allow EPRI to publish such an assessment, with appropriate protections for the developer s Intellectual Property (IP). Innovations for which the network believes it can contribute substantially to success. RAC Briefing Paper (9385G) Page 9 of 10

10 Appendix A Definitions of EPRI Techno logy Levels (Adopted from the U.S. National Aeronautics & Space Administration (NASA) Technology Readiness Levels) TRL 1 Exploratory research transitioning basic science into laboratory application. TRL 2 Bench scale laboratory testing to validate basic concepts. TRL 3 Subsystem or component development refined. TRL 4 Subsystem or component validation in simulated real-world environment. TRL 5 Early system feasibility demonstrated in laboratory or limited field application. TRL 6 Early field demonstration and system refinements completed. TRL 7 Complete system prototyping demonstration in an operational environment. TRL 8 Early commercial deployment (serial Nos. 1, 2, etc.). TRL 9 Wide-scale commercial deployment. RAC Briefing Paper (9385G) Page 10 of 10